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Cameco CCJ has gained 41.5% so far this year, outpacing the industry’s 17.3% growth. The Zacks Basic Materials sector has rallied 13.7% and the S&P 500 has risen 5.9% in the same time frame.
Cameco has outpaced peers Energy Fuels UUUU, Ur Energy URG and Uranium Energy UEC as well. Energy Fuels has gained 27.4% year to date, Ur Energy has been flat and Uranium Energy has dipped 0.5%.
Cameco has been trading above the 200-day simple moving average (SMA) and the 50-day SMA, indicating a bullish trend.
With the stock riding high, investors may rush to add it to their portfolios. However, before making a decision, it will be prudent to take a look at the reasons behind the surge, the company’s growth prospects and risks (if any) in investing.
Maintained 2025 Production Targets Despite Setback: Cameco has two operating mines, Cigar Lake (in which it holds a 54.547% stake) and McArthur River (69.805%), along with a mill at Key Lake (83.33%). Cigar Lake is the world’s highest-grade uranium mine, whereas McArthur River is recognized as the largest high-grade uranium mine globally. Key Lake is the world’s largest uranium mill.
Cameco produced 6 million pounds of uranium (its share) in the first quarter of 2025, reflecting a 3% increase from the year-ago quarter. The company expects its share of production to reach 22.4 million pounds of uranium in 2025.
A planned maintenance shutdown at the Key Lake mill was carried out in the second quarter, but no further shutdowns are expected at McArthur River this year. For 2025, total production at McArthur River and Key Lake is projected to be 18 million pounds, with Cameco’s share estimated at 12.6 million pounds.
The site’s annual maintenance outage for Cigar Lake is planned for the third quarter, consistent with previous years. Cameco forecasts full-year production from Cigar Lake at up to 18 million pounds, with its share projected at 9.8 million pounds.
At joint venture Inkai, production activity was suspended by the majority owner and controlling partner, Kazatomprom, from Jan. 1, 2025. Production resumed on Jan. 23, 2025, and as a result, production was 1.1 million pounds (100% basis) for the quarter compared with 1.6 million pounds in the year-ago quarter.
Despite the interruption, Cameco indicated that its 2025 guidance has been unchanged. JV Inkai has revised its mine plan and budget to reflect the temporary suspension and now aims to produce 8.3 million pounds this year (100% basis), with Cameco’s purchase allocation set at 3.7 million pounds.
Expected Increase in Westinghouse 2025 Adjusted EBITDA: Cameco in June announced that it expects an increase of $170 million in its 49% equity share of Westinghouse Electric Company’s (Westinghouse) 2025 second quarter and annual adjusted EBITDA. This is tied to Westinghouse’s participation in the construction project for two nuclear reactors at the Dukovany power plant in the Czech Republic.
Cameco also expects significant financial benefits for Westinghouse, as a subcontractor, over the term of the construction project and related to the provision of the fuel fabrication services required for both reactors for a specified period. The outlook for Westinghouse’s compound annual growth rate for adjusted EBITDA remains 6-10% over the next five years. This excludes the impacts of the expected $170-million increase in its 2025 adjusted EBITDA.
The Zacks Consensus Estimate for CCJ’s 2025 earnings is pegged at $1.09 per share, indicating a 122% year-over-year upsurge. The same for 2026 is $1.62, suggesting 48.9% growth.
While the Zacks Consensus Estimate for Cameco’s earnings for 2025 has moved up over the past 60 days, the same for fiscal 2026 has moved down. This is shown in the chart below.
Cameco’s stock is trading at a forward price-to-sales ratio of 12.16 compared with the industry’s 1.24. It is above its five-year median of 6.54. The company’s Value Score of F suggests that the stock is not so cheap and indicates a stretched valuation at this moment.
Energy Fuels and Uranium Energy are currently trading higher at 14.13X and 36.5X, respectively. Ur Energy is trading much lower at 4.66X.
CCJ had a total debt/total capital of 13.3% as of March 31, 2025 which is on the lower side. Meanwhile, Energy Fuels and Uranium Energy have debt free balance sheets. Ur Energy’s total debt-to-total capital ratio is at 0.09%.
Uranium prices have been under pressure earlier this year due to oversupply and uncertain demand. Uranium futures have fallen to $74.5 per pound as a pause in fresh buying by holding funds allowed utilities to set lower bids. Prices have moved down 16.7% in a year.
Prices had hit a seven-month high of $79 on June 27, driven by the news that the Sprott Physical Uranium Trust plans to purchase $200 million worth of physical uranium. The U.S. government’s initiative to quadruple domestic nuclear energy capacity by 2050, along with rising energy needs from AI data centers, had also lifted sentiment.
CCJ continues to invest in increasing production and capitalize on market opportunities. Work is underway to extend the mine life at Cigar Lake to 2036. Cameco is also increasing production at McArthur River and Key Lake from 18 million pounds to its licensed annual capacity of 25 million pounds (100% basis).
Geopolitical events, energy security concerns and the global focus on the climate crisis amid rising low-carbon energy demand have created tailwinds for the nuclear power industry. Given Cameco’s low-cost and high-grade assets and diversified portfolio spanning the nuclear fuel cycle, it is well-poised to capitalize on these trends.
Supported by a strong balance sheet, the company is making investments to boost its capacity to capitalize on the expected surge in uranium demand. However, new investors can wait for a better entry point, considering the premium valuation and the current volatility in uranium prices. The stock currently carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
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